Jason Manufacturing is preparing its cash budget for the second
quarter. The inventory manager has provided the following amounts
budgeted for materials purchases:
April | $62830 | |
May | 45050 | |
June | 47400 |
The controller reports that Jason pays for 20% of its purchases in
the month of purchase, 70% in the month following purchase, and 10%
in the second month after purchase. What are Jason’s budgeted cash
payments for purchases in June?
The budgeted cash payments for purchase in June included 10% of purchases in April, 70% of purchases in May and 20% of purchases in June month.
10% purchase in April = 62,830 x 10%
10% purchase in April = $ 6,283.
70% purchase in May = 45,050 x 70%
70% purchase in May = $ 31,535
20% purchase in June = 47,400 x 20%
20% purchase in June = $ 9,480
Total = $ 47,298.
Hence, $ 47,298 is the correct answer.
SUMMARY:
The budgeted cash payments in June month is $ 47,298.
Hence, $ 47,298 is the correct answer.
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